Troubled-Loan Trail Leads to China

During the past two decades, investors have been following the global trail of nonperforming loans from one economy to another.

These days, that trail is leading to China, where investors who see opportunity in troubled loans have been buying such loans, or NPLs -- many of which were spawned more than 10 years ago. And now the market could expand further if China is hit with another wave of defaults driven partly by the large amount...